MAC: Mines and Communities

Themes

NGO coalitions will take legal action on Indonesian Parliament's endorsement of Government Decree

Published by MAC on 2004-07-24

NGO coalition will take legal action on Parliament's endorsement of government decreee No/1/2004

24th July 2004

Jakarta ­ The NGO Coalition against mining in protected areas will take legal action after Parliament yesterday endorsed the Government decree to amend a law (Perpu) No. 1/2004.

The parliamentary endorsement of the Perpu decree was not unexpected given the degree of political intrigue around the substance and process of issuance of the decree. Up until the day before yesterday's endorsement, the working committee and special committee which were established to assess the Perpu decree were deadlocked, unable to reach a unanimous decision to endorse or reject the perpu. The uncertainty of parliamentarians when asked to make a decision raised big questions and suspicions of hidden motives. This despite the fact that various people, including numerous experts in national and international law gave evidence to the parliamentary committees that there was no need to fear international arbitration before the Perpu amendment. Legal expert Todung Mulya Lubis gave evidence during parliamentary committee hearings that it was not the ban on open-pit mining in protected forests, but actually the Perpu decree and the subsequent Presidential decree which opened the door not only to international arbitration threats, but to the possibility of the Indonesian government being accused via World Trade Organisation of discrimination against certain foreign companies operating in Indonesia.

"The threat of international arbitration must not become a spectre instilling fear in parliament over the ban on open-pit mining in protected forests. The Indonesian government should follow the example of the Costa Rican government which had the courage to face off the threat of international arbitration by foreign companies, for the sake of protecting forests and thus defending the interests of the community and environment," insisted Longgena Ginting, National Executive Director of the Indonesian Forum for the Environment, WALHI.

"The endorsement of this Perpu is a bad precedent for the shape of legal reform in Indonesia. The vehicle of perpu decrees can be easily misused by the President to legalise policies which only benefit a few and for momentary political expediency," said Indro Sugianto, Executive Director of the Indonesian Center for Environmental Law.

Presidential Decree No.42/2004 which flowed from Perpu No.1/2004 has provided political justification for 13 mining companies to operate in protected forests. This is the point of entry for a process of destruction in the days to come. Inevitably, the other 145 mining companies which were not named in the presidential decree won't remain silent. They will demand the same dispensation from the government. This spells disaster for 11.5 million hectares of protected areas claimed as mining concessions.

Conflict and ecological destruction will be ongoing at the mining sites newly licensed by the government. And this will worsen suffering for local communities whose livelihoods depend on forests," concluded Siti Maimunah, National Coordinator of the Indonesian Mining Advocacy Network, JATAM.

To restore Indonesian legal standards, the NGO Coalition will take legal action relating to the Perpu decree. This legal action will not be restricted to the Perpu, but will extend to legal action regarding PT Nusa Halmahera Minerals (owned by Newcrest Mining of Australia) which commenced open-pit mining in the Toguraci Protected Forest, after the 1999 Forestry Law ban but well before the Perpu decree and presidential decree. PT Nusa Halmahera Minerals clearly broke the law, especially clause 38(4) of Forestry Law No.41/1999 which explicitly prohibits open-pit mining in protected forests.

The NGO Coalition also calls on all levels of the community, both at the mining sites and in the wider public which will experience the impacts of environment disasters resulting from forest destruction, to closely examine the policies which have recently been taken by this government and which have the potential for great losses for the community.

Fitri Wulandari, Jakarta - A group of legislators suspect that some of their colleagues have been bribed into approving the governmental regulation in lieu of law which allows open pit mining in protected forest areas.

Bambang Setyo, a member of the Anticorruption Caucus, said the indication of bribery was the fact that major parties had voted to pass regulation in lieu of law No. 1/2004 into law during the House of Representatives' plenary session on July 15.

In contrast, during the last meeting of the special committee to deliberate the bill prior to the plenary session, only the largest faction in the House, the Indonesian Democratic Party for Struggle (PDI Perjuangan), supported the bill.

The rest of the factions, including Golkar, the second largest faction, either rejected the bill or were undecided.

"The Caucus smells something fishy. There has been a dramatic change that prompted three major factions of the House to endorse the bill during a vote," Bambang said in a media briefing on Friday.

Aside from PDI Perjuangan and Golkar, the United Development Party (PPP), the third largest faction also voted in favor of the bill.

The caucus was set up in April 2004 as a voluntary drive by lawmakers to fight corruption and collusion in the legislature. Bambang claimed the caucus has 30 members of various factions in the House, whom he refused to identify.

A few days before the plenary session, lawmakers had talked about "money being offered" for those who agreed to the bill, Bambang said.

"My colleagues said they were offered between Rp 50 million (about US$5,500) to Rp 150 million," Bambang, who is from Crescent Star faction, said, adding that he got a similar offer from a fellow lawmaker.

Last week, the House passed regulation in lieu of law No. 1/2004 into law after 131 lawmakers out of 232 in the plenary session voted for the controversial bill.

The bill is the same in principle as Forestry Law No. 41/1999 except for an additional clause stipulating that mining companies who have signed contracts prior to the enactment of the Forestry Law may resume their open-pit mining activities. The 1999 Forestry Law bans open-pit mining operations in protected forests.

The government issued Presidential Decree No. 41/2004 to allow 13 mining companies resume their operations as an implementation of the law.

Herman Widyananda, the head of the special committee for the deliberation of the bill, dismissed the bribery allegation.

"I am not aware of the rumors. There was no bribery," Herman of Golkar told The Jakarta Post on Friday.

While acknowledging most factions were undecided until the plenary session, Herman said it was not unusual for factions to change their stance in the plenary session.

Herman claimed Golkar's support for the bill was mainly to avoid potential arbitration proceedings that would be initiated by investors seeking Rp 188 trillion in compensation for the closure of the mines.

"There was a dilemma between environmental and economic issues. But economic concerns were deemed more important," he said.

Herman added parties who opposed the endorsement could file for a judicial review with the Constitutional Court in order to annul it.

After a lengthy debate at a plenary meeting on Thursday (15/7/04), 131 legislators voted in favor of the ruling and 102 voted against it.

"This decision is in line with the government's attempt to ensure legal certainty in the mining sector, which has been in limbo for years," Forestry Minister Muhammad Prakosa was quoted as saying by The Jakarta Post daily.

Mining in protected forests was banned under the 1999 Forestry Law, jeopardizing dozens of mining concessions awarded prior to the enactment of the legislation.

Keen to reverse six consecutive years of declining investment in the mining sector and to avoid potential lawsuits for breach of contract, President Megawati Sukarnoputri on March 11 issued the regulation allowing the 13 companies with contracts issued before 1999 to continue their work.

Environmentalists have condemned the regulation and expressed suspicion the mining firms, which include several multinationals, might have donated campaign funds to certain political parties ahead of the recent presidential election.

Most of parliament's nine factions opposed the ruling but they lacked the numbers to have it annulled.

Those against the regulation were the National Awakening Party, the Reform faction, the Crescent Star Party, the Military/Police faction, the Indonesian Nationhood Unity faction and the Daulat Ummah faction.

Those in favor were Golkar Party, the United Development Party and Megawati's Indonesian Democratic Party of Struggle.

Critics claim the endorsement of the regulation will allow about 140 other mining firms with contracts issued before 1999 to also demand resumption of their operations in protected forests.

But Prakosa said the government had not yet considered granting the other companies the same permits.

A coalition of conservation groups, led by the Indonesian Forum for the Environment (Walhi), is planning to challenge the regulation in the Constitutional Court.

They say the challenge will be a test case to see if the court puts the interests of the nation and the environment above those of multinational corporations.

Conservationists have rejected arguments that companies banned from mining in protected forests could sue the government for billions of dollars under international arbitration for breach of contract.

Investment commitments by the 13 mining firms reached $17 billion last year and contributed $400 million to state coffers, an official of the Energy and Mineral Resources Ministry said Friday.

Simon Sembiring, director general of geology and mineral resources, said the mining operations were also accelerating infrastructure development and job creation in the regions.

Commenting on the objections by environmentalists, he said they were reasonable. "The protests are positive, they remind us we have to be careful to not destroy our environment," he was quoted as saying by state news agency Antara.

House urged to challenge mining ruling

A. Junaidi, Jakarta, The Jakarta Post

2nd July /2004

Opposition to the government regulation in lieu of law, or Perpu, on mining is growing, raising doubts over the future of mining operations in protected forests.

Two prominent legal experts told the House of Representatives (DPR) on Thursday that Perpu No. 1/2004 had no strong legal basis.

"In terms of procedure and substance, Perpu No. 1/2004 does not meet the requirements for issuance," Koesnadi Hardjosoemantri, a law professor from Gadjah Mada University, told House members in charge of deliberating the regulation.

According to Article 22 of the Constitution, Koesnadi said, a perpu was issued only in an emergency.

The government issued Perpu No. 1/2004 when several mining companies halted operations following the enactment of Law No. 41/1999, which bans open-pit mining in protected forests.

"The substance of the regulation could cause greater environmental damage. So we suggest that the House reject it," Koesnadi said.

The House has begun deliberating Perpu No. 1/2004, which stipulates that all mining contracts signed before the enactment of Law No. 41/1999 on forestry are valid for the remainder of their terms.

President Megawati Soekarnoputri also issued a complementary decree on May 12, 2004, allowing 13 mining companies to resume operations in protected forests.

The firms, most of which are owned by foreign investors, including those from the United States and Australia, operate in protected forests in Riau, Maluku, Lampung, East Kalimantan, South Kalimantan, Papua and other areas throughout the country.

Several non-governmental organizations have deplored the perpu and the presidential decree, saying that the rulings opened the way to more environmental damage.

They said the two regulations had violated Law No. 41/1999 on forestry, which banned the operation of open-pit mining in protected areas.

Many local residents have also opposed the renewed operation of the firms. One resident was shot dead by police last year during a protest against a coal mining operation in a protected forest in Halmahera, Maluku.

Noted lawyer Todung Mulya Lubis told legislators that the government should not worry about the possibility of lawsuits being filed by foreign investors.

He said foreign investors could not demand that the government be accountable for a breach of contract, as Law No. 41/1999 had been ratified by the House, and because any agreements between the government and investors could not violate Indonesian laws.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro had previously warned of legal repercussions if Indonesia failed to honor its mining contracts.

Government officials have often cited a 2001 case in which the Geneva Arbitration Court ordered state oil and gas company Pertamina to pay US$261 million in compensation to Karaha Bodas Co., which was owned by several U.S. investors, for canceling its geothermal power project in Garut, West Java.

The government had halted the project in 1998 as part of belt-tightening measures to cope with the economic crisis.